The Australian Prudential Regulation Authority (APRA) has accepted an enforceable undertaking (EU) from two former Zurich executives, bringing to an end action against former employees of Zurich Australia Insurance Limited (ZAIL) and Zurich Financial Services Australia (ZFSA).
Former ZAIL director and chief executive Malcolm Jones and former ZAIL and ZFSA executive Florian Salzberger offered the EU to APRA, acknowledging their roles in transactions that misled auditors and APRA about the solvency of ZAIL and falsely inflating company profits by $61 million.
They have agreed not to act as a director or senior manager of a general insurer, authorised non-operating holding company or agent of a foreign general insurer for 14 and 12 years, respectively.
APRA had previously disqualified Jones on 7 May 2007 and Salzberger on 19 December 2006, but both sought a review of their disqualifications in the Administrative Appeals Tribunal (AAT).
APRA accepted the undertakings in settlement of the appeal proceedings after the AAT rejected appeals against disqualifications by former Zurich executives John Butler and Alan Parsonson.
APRA had been taking action against former Zurich employees following an investigation into two financial reinsurance transactions that ZAIL entered into with General and Cologne Re Group (GCRA) in 2000 that resulted in ZAIL appearing to meet its regulatory solvency requirements when it did not.
On 26 May 2005 APRA accepted an EU from ZAIL and ZFSA regarding two GCRA financial reinsurance transactions which resulted in ZAIL's profits being overstated.
A total of seven former Zurich employees have now been removed, with two employees at GCRA also removed from the industry.
